("TSA") FY 2018 Cash Flow - aafaf

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Jun 15, 2018 - received by the TSA is included in the annual General Fund budget presented to the Puerto Rico ...... 13
Puerto Rico Department of Treasury Treasury Single Account ("TSA") FY 2018 Cash Flow As of June 15, 2018

1

Disclaimer

‐ The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), the Government of Puerto Rico (the “Government”), and each of their respective officers, directors, employees, agents, attorneys, advisors, members, partners or affiliates (collectively, with AAFAF and the Government the “Parties”) make no representation or warranty, express or implied, to any third party with respect to the information contained herein and all Parties expressly disclaim any such representations or warranties. ‐ The Parties do not owe or accept any duty or responsibility to any reader or recipient of this presentation, whether in contract or tort, and shall not be liable for or in respect of any loss, damage (including without limitation consequential damages or lost profits) or expense of whatsoever nature of such third party that may be caused by, or alleged to be caused by, the use of this presentation or that is otherwise consequent upon the gaining of access to this document by such third party. ‐ This document does not constitute an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls or other attestation or review services in accordance with standards established by the American Institute of Certified Public Accountants or any other organization. Nor does this document constitute an audit of compliance with any other federal law, rule, or regulation. Accordingly, the Parties do not express an opinion or any other form of assurance on the financial statements or any financial or other information or the internal controls of the Government and the information contained herein. ‐ Any statements and assumptions contained in this document, whether forward‐looking or historical, are not guarantees of future performance and involve certain risks, uncertainties, estimates and other assumptions made in this document. The economic and financial condition of the Government and its instrumentalities is affected by various financial, social, economic, environmental and political factors. These factors can be very complex, may vary from one fiscal year to the next and are frequently the result of actions taken or not taken, not only by the Government and its agencies and instrumentalities, but  also by entities such as the government of the United States. Because of the uncertainty and unpredictability of these factors, their impact cannot be included in the assumptions contained in this document. Future events and actual results may differ materially from any estimates, projections, or statements contained herein. Nothing in this document should be considered as an express or implied commitment to do or take, or to refrain from taking, any action by AAFAF, the Government, or any government instrumentality in the Government or an admission of any fact or future event. Nothing in this document shall be considered a solicitation, recommendation or advice to any person to participate, pursue or support a particular course of action or transaction, to purchase or sell any security, or to make any investment decision. ‐ By receiving this document, the recipient shall be deemed to have acknowledged and agreed to the terms of these limitations. ‐ This document may contain capitalized terms that are not defined herein, or may contain terms that are discussed in other documents or that are commonly understood. You should make no assumptions about the meaning of capitalized terms that are not defined, and you should consult with advisors of AAFAF should clarification be required. ‐ The report dated January 19, 2018, “Summary of Bank account Balances for Puerto Rico Governmental Instrumentalities As of December 31 2017,” (the “Bank Account Balance Report”) disclosed the balance of Other Puerto Rico Treasury Custody Accounts of $580 million as of December 31, 2017. This balance was further segmented into $374M in pension‐related funds (Employee Withholdings and Pay‐Go Charges), $142M in Central Government non‐TSA funds (lottery‐related funds and other funds held and administered by central government agencies), and $64M held TSA Sweep Accounts that collect income and completely pass through to TSA on a daily basis (includes General Collections Posts, Agency Collections Posts, and SUT). As further set forth in the Bank Account Balance Report, processes are currently in place to continue evaluating the accounts, including analyzing the cash inflows and outflows and reviewing legal restrictions relative to funds deposited into the bank accounts.

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Glossary Term

Definition AACA ‐ Automobile Accident Compensation Administration, or Administración de Compensaciones por Accidentes de Automoviles, is a component unit of the Commonwealth of Puerto Rico. Act 154 ‐ Act 154 means Act No. 154‐2010, which, inter alia, imposes a temporary excise tax on the acquisition by multinationals of certain property manufactured or produced in whole or in part in Puerto Rico and on the acquisition of certain manufacturing services  carried out in Puerto Rico. The Act 154 temporary excise tax expires on December 31, 2027. AFI/RBC ‐ Infrastructure Financing Authority. Agency Collections ‐ Collections made by central government agencies at collection posts for services rendered by the agencies as well as fees, licenses, permits, fines and others.  Approved FY 2018 Budget ‐ Consolidated Budget for Fiscal Year 2018 approved by the Puerto Rico Legislative Assembly on July 13, 2017. ASC ‐ Compulsory Liability Insurance, private insurance company. ASSMCA ‐ Administración de Servicios de Salud Mental y Contra la Adicción, or Mental Health and Addiction Services Administration, is an agency of the Commonwealth of Puerto Rico. Bank Checks Paid ‐ A report provided by the bank that is utilized to determine vendor payments.  BPPR ‐ Banco Popular of Puerto Rico. Budget Reserves ‐ Non‐cash reserves for budgeting purposes.  Consist of a Liquidity Reserve ($190M), OMB Reserve ($446M), Budgetary Reserve ($85M), Other Income Reserve ($84M), and Emergency Fund ($30M). Checks in Vault ‐ Refers to checks issued but physically kept in vault. Collections ‐ Collections made by the Department of the Treasury (Treasury) at collection posts and/or the Treasury revenue collection systems, such as income taxes, excise taxes, fines and others.  COFINA ‐ Puerto Rico Sales Tax Financing Corporation. COFINA SUT Collections ‐ In accordance with a sales tax finance agreement between the government of Puerto Rico and COFINA, throughout FY2018 the first 5.5% (of total 10.5%) of gross SUT collections are reserved for and deposited into the COFINA bank account held at BNY Mellon  until a $753M cap has been reached on total SUT collections remitted to COFINA. DTOP ‐ Department of the Transportation and Public Works DTPR ‐ Department of the Treasury of Puerto Rico. ERS ‐ Employees Retirement System means the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, a statutory trust created by Act No. 447 of May 15, 1951, as amended, to provide pension and other benefits to retired  employees of the Commonwealth, its public corporations and municipalities. ERS is a fiduciary fund of the Commonwealth of Puerto Rico for purposes of the Commonwealth’s financial statements. General Fund ‐ General Fund (Operating Fund) means the Commonwealth principal operating fund; disbursements from such fund are generally approved through the Commonwealth’s annual budgeting process. DTPR Collection System ‐ This is the software system that DTPR uses for collections. HTA ‐ Puerto Rico Highways and Transportation Authority, a public corporation and a component unit of the Commonwealth of Puerto Rico. JRS ‐ Judiciary Retirement System means the Retirement System for the Judiciary of the Commonwealth of Puerto Rico, a statutory trust created to provide pension and other benefits to retired judges of the Judiciary Branch of the Commonwealth. JRS is a fiduciary  fund of the Commonwealth of Puerto Rico for purposes of the Commonwealth’s financial statements. Liquidity Plan ‐ The FY 2018 Treasury Single Account Liquidity Plan was prepared at the beginning of the fiscal year based on the approved FY 2018 Budget, was projected monthly through June 2018, and is used as the benchmark against which results are measured.  As a  result of material economic and operational changes stemming from Hurricanes Irma and Maria, DTPR is in the process of developing a reforecast of TSA cash flows to year‐end.  Until then, the original TSA forecast will continue to serve as the measure for cash  Net Payroll ‐ Net payroll is equal to gross payroll less tax withholdings and other deductions. 

Nutrition Assistance Program ‐ NAP, or the Nutrition Assistance Program, also known as PAN, or Programa de Asistencia Nutricional is a federal assistance nutritional program provided by the United States Department of Agriculture (USDA) solely to Puerto Rico. Pension PayGo ‐ Pension PayGo‐ Puerto Rico pension system that is funded through a pay‐as‐you‐go system.  Retirement benefits expenses of government employers are paid by the central government and reimbursed by the employers, with such funds received by the TSA. PRASA ‐ Puerto Rico Aqueducts and Sewers Authority. PREPA ‐ Puerto Rico Electric Power Authority. PRHA ‐ Puerto Rico Housing Authority.  PRIFAS ‐ Puerto Rico Integrated Financial Accounting System. Reconciliation Adjustment ‐ Reserve account in DTPR cash flow, related to E&Y's Expense Reconciliation Adjustment (RA) as per the Fiscal Plan certified on March 13, 2017. Retained Revenues ‐ Revenues conditionally assigned to certain public corporations and the collections of those revenues are through accounts referred to as “pass through” accounts.  The largest of these pass‐through accounts consist of (i) AACA auto insurance, (ii) AFI/RBC  petroleum tax, (iii) ASC personal injury insurance, (iv) HTA toll revenues. RHUM System ‐ This is the software system that DTPR uses for payroll. SIFC ‐ State Insurance Fund Corporation. Special Revenue Funds ‐ Commonwealth governmental funds separate from the General Fund that are created by law, are not subject to annual appropriation and have specific uses established by their respective enabling legislation. Special Revenue Funds are funded from, among  other things, revenues from federal programs, tax revenues assigned by law to public corporations and other third parties, fees and charges for services by agencies, dividends from public corporations and financing proceeds. SSA ‐ Social Security Administration.  TRS ‐ Teachers Retirement System means the Puerto Rico System of Annuities and Pensions for Teachers, a statutory trust created to provide pension and other benefits to retired teachers of the Puerto Rico Department of Education and to the employees of the  Teachers Retirement System. TRS is a fiduciary fund of the Commonwealth of Puerto Rico for purposes of the Commonwealth’s financial statements. TSA ‐ Treasury Single Account, the Commonwealth’s main operational bank account (concentration account) in which a majority of receipts from Governmental funds are deposited and from which most expenses are disbursed. TSA receipts include tax collections,  charges for services, intergovernmental collections, the proceeds of short and long‐term debt issuances and amounts held in custody by the Secretary of the Treasury for the benefit of the Commonwealth’s fiduciary funds. Only a portion of the revenues  received by the TSA is included in the annual General Fund budget presented to the Puerto Rico Legislative Assembly for approval.  Other revenues are separately assigned by law to certain agencies or public corporations but still flow through the TSA.

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Introduction

‐ Enclosed is the weekly Treasury Single Account ("TSA") cash flow report, supporting schedules and Liquidity Plan to actual variance analysis. ‐ TSA is the Commonwealth’s main operational bank account (concentration account) in which a majority of receipts from Governmental funds are deposited and from which most expenses are disbursed. ‐ Beginning April 2016, TSA receipts are deposited in a commercial bank account rather than the Government Development Bank for Puerto Rico ("GDB"). ‐ Receipts in the TSA include tax collections (including revenues assigned to certain public corporations and pledged for the payment of their debt service), charges for services, intergovernmental collections (such as reimbursements from Federal assistance grants), the proceeds of short and long‐term debt issuances held in custody by the Secretary of Treasury for the benefit of the Government fiduciary funds, and other receipts. Only a portion of the revenues received by the TSA is included in the annual General Fund budget presented to the Puerto Rico Legislative Assembly for approval. Other revenues are separately assigned by law to certain agencies or public corporations but still flow through the TSA. ‐ Disbursements from the TSA include payroll and related costs, vendor and operational disbursements (including those reimbursed by Federal assistance grants and funded from Special Revenue Funds), welfare expenditures, capital outlays, debt service payments, required budgetary formulas and appropriation payments, pass‐through payments of pledged revenues to certain public corporations, tax refunds, payments of current pension benefits and other disbursements. ‐ Federal funds related to disaster relief for hurricanes Irma and Maria are deposited in a separate bank account overseen by the Government Authorized Representative ("GAR"), and transferred to the TSA only after admissable disbursements (per approved Project Worksheets) have been made. These inflows to the TSA will be captured on the Federal Funds Receipts (Schedule C); outflows will be captured on the Vendor Payments (Schedule E). ‐ Data for TSA inflows/outflows is reported from various systems within the Department of Treasury of Puerto Rico ("DTPR"): Cash Flow Actual Results ‐ Source for the actual results is the TSA Cash Flow. Schedule A ‐ Collections ‐ Source for collections information is the DTPR collections system. Schedule B ‐ Agency Collections ‐ Source for the agency collections is DTPR. Schedule C ‐ Federal Fund Receipts ‐ Source for the federal funds receipts is DTPR. Schedule D ‐ Net Payroll ‐ Source for net payroll information is the DTPR Rhum Payroll system. Schedule E ‐ Vendor Payments ‐ The source for vendor payments is the Bank checks paid report and a report from the DTPR PRIFAS system.  Schedule F ‐ Other Legislative Appropriations ‐ Source for the other legislative appropriations is DTPR. Schedule G ‐ Central Government ‐ Partial Inventory of Known Short Term Obligations ‐ Sources are DTPR. Schedule H ‐ Budget Allocation of the Reconciliation Adjustment for the Central Government Loan to PREPA ‐ Source is the Office of Management and Budget ‐ Data limitations and commentary: The government has focused on the seven schedules above for which access to reliable, timely, and detailed data is available to support these items. The government continues to  work with DTPR and other parties to access additional reliable data that would help us provide detail in the future for other line items in the Cash Flow.

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FY 2018 TSA Forecast Key Assumptions

‐ The FY 2018 Treasury Single Account cash flow forecast Liquidity Plan was prepared at the beginning of the fiscal year based on the approved FY 2018 Budget, was projected monthly through June 2018, and is used as the benchmark against which weekly results and variances are measured. As a result of material economic and operational changes stemming from Hurricanes Irma and Maria, DTPR is in the process of developing a reforecast of TSA cash flows to year‐end. Until then, the original TSA forecast will continue to serve as the measure for weekly cash flow variances.

‐ Forecast collections and disbursements through the General Fund and Federal Fund are consistent with the approved FY 2018 Budget, with the exception of payroll  outlays which were forecast based on run‐rate cash disbursement trends, and budget reserves which are non‐cash and do not impact the TSA direct cash flows.

‐ TSA General Fund inflows are "gross" (i.e. include accrued Tax Refunds in 2018) and therefore higher than presented in the approved FY 2018 Budget, which considers General Fund revenues net of current year tax refunds. Repayment of deferred tax refunds (from CY 2016 and prior) total $292mm; reserve for current year tax refunds (excluding garnishments) total $456mm.

‐ Payroll outlays are based on FY 2017 run‐rate disbursements, less savings measures, representing a $298mm favorable adjustment to the approved FY 2018 Budget for the full fiscal year. Payroll is presented inclusive of segregated employee contributions ($349M for the year). Payroll is disbursed through the TSA on a bi‐weekly basis, approximately on the 15th and 30th of each month.

‐ Pensions reflect the implementation of the pay‐as‐you‐go model in FY 2018. Retirement system inflows represent deposits from municipalities and corporations net of administrative expenses. Figures also include ERS / TRS / JRS asset sales ($390M), which occured in July 2017.

‐ The Liquidity Plan assumes collections and outlays of Federal Funds are equal in FY 2018 (zero net cash impact), excluding potential timing impact. ‐ Clawback funds set aside prior to June 2016 (approx. $146mm held at BPPR accounts and $144mm held at GDB) are considered restricted cash and therefore excluded from the projected cash balance.

‐ The Liquidity Plan assumes $592mm of Reconciliation Adjustment as per the approved FY 2018 Budget and March 13 certified Fiscal Plan, which is projected separately from supplier payments and distributed evenly over 12 months.  No further provision has been made for potential contingent liabilities against the government.

‐ The Liquidity Plan assumes that beginning November 2017, COFINA SUT collections flow to the General Fund and are available to the TSA for operational purposes, totaling approx. $316mm in incremental collections in the forecast. However, these funds flowed to the COFINA bank account (BNY Mellon), which created a permanent variance of ‐$316mm against the Liquidity Plan.  

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As of June, 15 2018

Puerto Rico Department of Treasury | AAFAF Executive Summary ‐ TSA Cash Flow Actual Results for the Week Ended June 15, 2018

$3.01bn

$252M

Bank Cash Position

Weekly Cash Flow

Key Figures as of 06/15/2018 $67M Weekly Variance (a)

$1210M

$698M

YTD Net Cash Flow

YTD Net Cash Flow Variance

3,009

Weekly Cash Position: Actuals vs. Liquidity Plan (figures in $M)

 3,000

 (a)

Cash Position: Actual 698 Cash Position: Liquidity Plan

2,311

6/15

5/31

4/30

3/31

2/28

1/31

12/31

11/30

10/31

9/30

8/31

7/31

 1,000

7/1

 2,000

Weekly Cash Flow Variance $67M:

Weekly variance mainly due to: (1) +$51M in ASES Appropriations (temporary); and (2) +$51M in Federal Fund Receipts (permanent, due to additional funding  provided for by The Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017). All other line items have a total weekly variance of ‐ $35M

YTD Net Cash Flow Variance $698M:

The primary drivers of the +$698M YTD variance are: (1) Net cash benefit from additional Medicaid Funding due to the Bipartisan Budget Act of 2018 (+$577M,  permanent); (2) Net cash benefit of RA less cash reapportionment +$286M (see Sch.H);  (3) Sales & Use Tax Collections ( ‐$315M, permanent); (4) Net cash impact of  lower vendor disbursements and subsequent lower federal fund receipts for federally reimbursable payments ( ‐$133M, mostly permanent); (5) Temporary net cash  benefit of lower transfers to ASES (+$147M, timing‐related); (6) Net cash benefit of lower disbursements of tax refunds than forecast (+$102M); and (7) Others  (+$34M).

Footnotes: (a) Variances represent actual results vs. FY2018 Liquidity Plan.  Additional detail and commentary on weekly and YTD variances is provided on pages 7 and 8 of this report.

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Puerto Rico Department of Treasury | AAFAF Key Takeaways ‐ TSA Cash Flow Actual Results

As of June 15, 2018

$3.01bn

$252M

Bank Cash Position

Weekly Cash Flow

Key Figures as of 06/15/2018 $1210M $67M Weekly Variance (a)

YTD Net Cash Flow

$698M YTD Net Cash Flow Variance  (a)

Notable variances (a) for the week ended June 15, 2018: 51.37

+$51M

Inflow ‐ Federal Fund Receipts

(Permanent) Variance is mostly permanent, due to increases in federal funds received for the Nutritional Assistance Program because of additional funding provided for by The  Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017.

50.78

+$51M

Outflow ‐ ASES Appropriation

(Temporary) Variance is due to the timing of federal funds received for the Medicaid Program and the subsequent pass‐through appropriation to ASES, and will be offset later this  month.

‐33

‐$33M

Outflow ‐ Nutritional Assistance  Program

(Permanent) Variances is likely permanent and is offset by increases in federal funds received for the Nutritional Assistance Program due to additional funding provided for by The  Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017.

‐33.7

‐$34M

Outflow ‐ Other Appropriations

(Permanent) Variance is permanent and mostly due to additional funds reapportioned from the Reconciliation Adjustment ($38M) for ASEM in order to augment their current  appropriations from Central Government and support ongoing liquidity needs at this Component Unit. Refer to Schedule H for details of the reapportionment by agency that provided  the funding for these distributions to the Police Department.

31.32

+$31M

All Other Inflows & Outflows

Includes Excise Tax through BPPR (+$27M), Rum Tax (+$21M), Other Payroll disbursements (‐$30M) and others (+$13M).

(a)

Notable YTD variances   as of June 15, 2018: ‐315

‐$315M

Inflow ‐ Sales & Use Tax

(Mostly Permanent) YTD permanent variance is driven by: (1) Liquidity Plan assumed $316M of COFINA funds would flow to the General Fund but instead, the funds were deposited in  the COFINA account; (2) lower than anticipated collections due to lost revenues from Hurricane Maria's impact on economic activity; (3) temporary sales tax exemption on prepared  foods and items sold by small and medium merchants (exemptions expired on 1/7 and 12/31, respectively). Additionally, various other offsetting and competing drivers have influenced  gross SUT month to month, including a shift in buying mix from smaller, less SUT compliant stores to larger, more SUT compliant retailers.

‐300

‐$151M

Outflow ‐ Net PREPA Loan

(Permanent) $300M in funds relating to a loan from the Central Government were transferred to PREPA from the TSA on February 23, 2018.  Subsequently, due to excess revenues  collected by PREPA that were applied to the repayment of outstanding Revolving Credit Loans, separate payments totaling $149M YTD were made to the TSA from PREPA (see Net  Inflow PREPA below). YTD variance is considered permanent variance to the FY2018 Liquidity Plan, as additional funds repaid to the TSA may subsequently be re‐drawn by PREPA if  necessary.

‐37.8

‐$38M

Inflow ‐ General Collections

(Mostly Permanent) Principally due to the negative impacts caused by Hurricane Maria.  Significant YTD collections variances are  ‐$100M in Act 154 collections, ‐$64M in Nonresident  Withholdings, ‐$28M in Individual Income tax collections, partially offset by +$284M in Corporate Income Taxes, +$168M in HTA Pass Through collections (Petroleum & Gas Tax  collections constitutes the majority of the favorable YTD variance) and others.

294.3

+$294M

Inflow ‐ Federal Fund Receipts

149.1

(Temporary)  YTD variances in federal fund receipts are the result of:  

(1) Lower vendor disbursements :‐$574M lower‐than‐projected federal reimbursements for vendor payments, partially offset by disaster‐related federal reimbursements for vendor  payments not considered in the Liquidity Plan (+$107M offsetting variance);   (2) Additional federal funds received for federal programs:   Disbursements for the Nutritional Assistance Program (+$232M offsetting variance) and ASES pass‐through Medicaid funds  (+$432M offsetting variance) represent permanent differences, as additional federal funds incremental to the Liquidity Plan were unlocked for Nutritional Assistance and Medicaid.   The Bipartisan Budget Act of 2018 provided for additional Medicaid funding that was not considered in the original Liquidity Plan and may approximate $448M by fiscal year end.   Furthermore, the Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017 provided for additional Nutritional Assistance funding that was not considered in  the original Liquidity Plan and may approximate $250M by fiscal year end. (3) Other: Lower federally‐funded payroll disbursements as a percent of total payroll versus the Liquidity Plan (‐$56M variance); and an additional +$153M of timing variance.  542.7

+$543M

Outflow ‐ Reconciliation Adj.

(Offset by Reapportionments) Of the $592M total FY2018 budgeted Reconciliation Adjustment (RA), $547M has been offset by reapportionments of the RA for other budgetary needs:  (1) $300M loan to PREPA; (2) $80M for the Department of Transportation; (3) $11M for the OMB; (4) $78M for the creation of the Emergency Municipal Assistance Fund; (5) $40M for  the Police Department; (6) $38M for ASEM.  The remaining $45M of the RA may be reapportioned prior to the fiscal year's end.  Actual cash offsets to the $543M YTD RA variance total ‐ $286M.  Refer to Schedule H for additional detail.

441.4

+$441M

Outflow ‐ Vendor Disbursements

(Partially Temporary)  +$467M of YTD variance is related to federally‐reimbursable disbursements, approximately 65% of which the Liquidity Plan projected would relate to budget  period 2017.  Remaining variance mostly due to offsetting permanent variances, including: (1) the creation of the Emergency Municipal Assistance Fund and subsequent $1M  disbursements to each of the 78 Puerto Rico Municipalities to cover operational and administrative costs in light of any declines in collections resulting from Hurricanes Irma and Maria;  and (2) disaster‐related vendor payments not considered in the Liquidity Plan that will be or have been reimbursed by federal funds.

‐76.6

‐$77M

All Other Inflows & Outflows

Largest variances Included are Retirement System Inflows (‐$112M), Agency Collections (‐$68M), outflows for the Nutritional Assistance Program (‐$232M), Pension Related Costs  (+$142M), appropriations to ASES (+$147M, Rum Tax collections (+$99M) and others (‐$53M).

Key Cash Flow Risks to Liquidity Plan through June 30, 2018: PRASA

On Friday, May 25, 2018, the Oversight Board approved an $80 million TSA loan to support PRASA’s liquidity.  The proceeds of the loan are expected to be disbursed to PRASA by the  end of June and will temporarily delay PRASA’s liquidity shortfall.

Other Public Corporations

The Puerto Rico Ports Authority (Ports) or the Puerto Rico Integrated Transit Authority (PRITA) may potentially require funds to be transferred from the TSA to support their liquidity  needs and continue to fund their operations for the remainder of the fiscal year.

Title III Spend

TSA funds have been required to cover additional non‐budgeted Title III spend throughout 4Q (the total may approximate ‐$140M by fiscal year end). From a budgetary perspective,  funds have been and may continue to be reapportioned from noncash budgetary reserves to provide for this spend.  Refer to Schedule H for additional detail.

Key Cash Flow Opportunities to Liquidity Plan through June 30, 2018: Bipartisan Budget Act of 2018  (Disaster Relief and Medicaid  Program Funding)

The Bipartisan Budget Act of 2018 (The Act) passed by Congress on 2/9 includes provisions for additional disaster relief funding for Puerto Rico that will translate into positive cash  flows against the Liquidity Plan.  Additionally, The Act provides for federal funds to support Puerto Rico's public health care costs for the next two years. In the Liquidity Plan, federal  fund inflows for the Medicaid program (ASES) were forecast to run out in March 2018, with the remaining $448M required for Premiums & Claims costs at ASES to be paid out of the  TSA (budgeted as Special Revenue Funds).  The additional Medicaid funding package as recently passed by the US Government will positively impact the TSA ending cash balance by the  previous “gap” in funding of $448M.

Corporate Income Tax & SUT

Based on strong April and May results, Corporate Income Tax receipts and Sales & Use Tax collections may continue to outperform Liquidity Plan throughout the remainder of the fiscal  year.  Corporate Income Taxes have been higher due to revenues from companies engaged to participate in disaster recovery / reconstruction efforts, and the additional economic  activity due to those efforts has also positively impacted Sales & Use Tax revenues.

Additional Supplemental  The Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017 passed into law on 10/26/2017 provided for up to $1.27bn in USDA funds previously provided  Appropriations for Disaster Relief  for the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program) contingency reserve to provide a grant to Puerto Rico for disaster nutrition  Requirements Act of 2017 assistance.  This temporary assistance distributed through the Puerto Rico Nutrition Assistance Program (NAP) began March 1, and funds made available to Puerto Rico under this law  shall remain available for obligation by the Commonwealth until September 30, 2019, (incremental to the FY 2018 Certified Budget).  Through June 30, 2018 this is expected to yield a  cash flow opportunity of $250M. Petroleum & Gas Taxes

Strong Petroleum & Gas tax collections continued throughout Q4 providing additional positive variance in collections.  YTD collections variance for this revenue stream is +$195M,  largely driven by unplanned increases in demand for oil to run power generators.  YTD variance has partially offset other revenues that were negatively affected due to the Hurricanes.

Footnotes: (a) Variances represent actual results vs. FY2018 Liquidity Plan

7

Puerto Rico Department of Treasury | AAFAF TSA Cash Flow Actual Results for the Week Ended June 15, 2018

(figures in $000s) 1 2 3 4 5 6 7

General & Special Revenue Fund Inflows Collections (a) Agency Collections Sales and Use Tax Excise Tax through Banco Popular Rum Tax Electronic Lottery  Subtotal ‐ General & Special Revenue Fund Inflows

8 9 10

Retirement System Inflows Contributions From Pension Systems (b) Pension System Asset Sales Subtotal ‐ Retirement System Inflows

11 12 13 14 15 16

Other Inflows Federal Fund Receipts (c) Other Inflows (d) Interest earned on Money Market Account GDB Transactions Loans and Tax Revenue Anticipation Notes (l) Subtotal ‐ Other Inflows

As of June 15, 2018

Schedule A B

C

Prior Variance YTD 6/8

Actual 6/15

Forecast 6/15

Variance 6/15

Actual YTD 6/15

Forecast YTD 6/15

Variance YTD 6/15

($14,752) (68,105) (323,375) (31,901) 77,989 (16,626) ($376,770)

$329,036 4,621 56,590 91,789 21,243 – $503,278

$352,040 4,812 48,710 65,044 – – $470,607

($23,004) (191) 7,879 26,744 21,243 – $32,670

$7,652,335 446,371 1,514,217 609,823 239,031 105,380 $10,567,158

$7,690,091 514,668 1,829,712 614,980 139,800 122,006 $10,911,258

($37,756) (68,297) (315,496) (5,157) 99,231 (16,626) ($344,100)

(95,593) – ($95,593)

– – –

16,101 – $16,101

(16,101) – ($16,101)

258,635 390,480 $649,115

370,330 390,480 $760,810

(111,695) – ($111,695)

242,973 74,224 4,193 (28,766) 149,064 $441,689

131,575 14,737 – – – $146,312

80,201 3,539 – – – $83,741

51,374 11,197 – – – $62,571

5,384,604 387,214 4,193 – 149,064 $5,925,075

5,090,257 301,792 – 28,766 – $5,420,815

294,347 85,422 4,193 (28,766) 149,064 $504,260

($30,675)

$649,590

$570,449

$79,140

$17,141,348

$17,092,882

$48,466

7,873 (37,046) (61,485) ($90,658)

(66,563) (35,227) – ($101,790)

(66,750) (4,947) (13,464) ($85,161)

186 (30,280) 13,464 ($16,629)

(1,622,503) (1,286,387) (661,135) ($3,570,025)

(1,630,562) (1,219,062) (613,114) ($3,462,739)

8,059 (67,325) (48,021) ($107,287)

17

Total Inflows

18 19 20 21

Payroll Outflows Net Payroll (e) Other Payroll Related Costs ‐ (SSA, SIFC, Health Insurance) (f) Gross Payroll ‐ PR Police Department (g) Subtotal ‐ Payroll and Related Costs

22 23 24

Pension Outflows Pension Benefits Pension Paygo Outlays on Behalf of Public Corporations Subtotal ‐ Pension Related Costs

57,533 79,325 $136,858

(82,390) – ($82,390)

(87,569) – ($87,569)

5,179 – $5,179

(2,003,680) – ($2,003,680)

(2,066,392) (79,325) ($2,145,717)

62,712 79,325 $142,037

25 26 27 28 29 30 31

Appropriations ‐ All Funds Health Insurance Administration ‐ ASES University of Puerto Rico ‐ UPR Muni. Revenue Collection Center ‐ CRIM Highway Transportation Authority ‐ HTA Public Buildings Authority ‐ PBA Other Government Entities Subtotal ‐ Appropriations ‐ All Funds

95,807 0 (2,659) (137,730) (5,808) 62,734 $12,343

– – – – – (43,699) ($43,699)

(50,776) – – – (5,818) (10,009) ($66,603)

50,776 – – – 5,818 (33,689) $22,904

(2,272,561) (668,321) (251,066) (286,719) (69,802) (533,248) ($4,081,715)

(2,419,143) (668,321) (248,407) (148,989) (69,811) (562,292) ($4,116,963)

146,583 0 (2,659) (137,730) 9 29,044 $35,247

32 33 34 35 36 37 38 39

Other Disbursements ‐ All Funds Vendor Disbursements (h) Other Legislative Appropriations (i) Tax Refunds Nutrition Assistance Program Other Disbursements Reconciliation Adjustment Loans and Tax Revenue Anticipation Notes Subtotal ‐ Other Disbursements ‐ All Funds

455,128 (5,740) 87,315 (199,233) 22,922 542,667 (300,000) $603,058

(78,746) – (18,258) (73,152) – – – ($170,156)

(65,066) (7,824) (33,298) (40,166) – – – ($146,353)

(13,680) 7,824 15,039 (32,986) – – – ($23,803)

(2,707,749) (369,165) (674,745) (2,158,546) (65,844) – (300,000) ($6,276,048)

(3,149,196) (371,249) (777,099) (1,926,327) (88,766) (542,667) – ($6,855,303)

441,447 2,083 102,354 (232,219) 22,922 542,667 (300,000) $579,255

40

($398,035)

($385,686)

($16,580,721)

D

E F

H

Total Outflows

$661,602

($12,349)

($15,931,469)

41

Net Cash Flows

$630,927

$251,555

$184,764

$66,791

$1,209,879

$512,161

42

Bank Cash Position, Beginning (j)



2,757,322

2,126,395

630,927

1,798,997

1,798,997



43

Bank Cash Position, Ending (j)

$630,927

$3,008,876

$2,311,158

$697,718

$3,008,876

$2,311,158

$697,718







1

2

3

YTD variance is assumed to be permanent as stronger Rum Tax collections are a result of (1) higher than projected  volume of exports; and (2) Increase of Rum Tax per unit to $13.25 per proof gallon from $10.50 per proof gallon,  effective as of January 2018.

8

The majority of YTD variance is due to not yet receiving PayGo payments from PRASA and other public corporations &  municipalities. YTD variances in federal fund receipts are the result of: (1) Lower‐than‐projected federal reimbursements for vendor  payments (‐$574M variance); (2) disaster‐related federal reimbursements for vendor payments not considered in the  Liquidity Plan (+$107M variance);  (3) greater disbursements for the Nutritional Assistance Program (+$232M variance);  (4) ASES pass‐through Medicaid appropriations (+$432M variance); (5) lower federally‐funded portion of payroll  disbursements versus the Liquidity Plan (‐$56M variance); and an additional +$153M of timing variance.  Note the  Bipartisan Budget Act of 2018 provided for additional Medicaid funding that was not considered in the Liquidity Plan.   As such, federal funds received after 3/31 for the Medicaid Program, and for the remainder of the year, are incremental  to the amount projected in the Liquidity Plan and will result in permanent positive variances.  Furthermore, the  Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017 provided for additional  Nutritional Assistance funding than was considered in the Liquidity Plan.  The Commonwealth began to use these funds  as of March 1, and additional resources will remain available to Puerto Rico until September 30th, 2019.

11

12

YTD variance mainly due to +$49M higher in Petroleum import tax collections and +$15M in a one‐time transfer from  the Puerto Rico Tourism Company, with remaining variance due to higher non‐recurring inflows across various  programs and agencies, all of which are assumed to be permanent variances against the Liquidity Plan.

14 19

YTD variance is offset by GDB Transactions (relates to legacy debt service deposit agreement) variance in line 36. Variance due to the timing of various payments to financial service providers on behalf of public employees and for  insurance providers. Weekly variance due to timing and will be offset later this month.  ‐$50M of the YTD variance is offset by +$50M of the  YTD variance in line 23, as distributions to the Police Department for payment of employer contributions to their  retirement system is included in the line 23 YTD forecast. Variances in this line item are permanent and this line item is not expected to be utilized this fiscal year. +$50M of the  YTD variance offsets ‐$50M of the YTD variance in line 20, as distributions to the Police Department for payment of  employer contributions to their retirement system was included in the line 23 forecast but are disbursed through line  20.  Remaining YTD variance is offset by a reduction in Contributions From Pension Systems in line 8.

20

23

25 28 30

32

35 Net Loan Outstanding to PREPA (sum of lines 15 & 38):

($150,936)

($150,936)



($150,936)

Footnotes : (a) Includes reserve for tax returns ($456 million) and Special Revenue Fund portion of posted collections. (b) Paygo charges to municipalities and public corporations collected at the TSA. (c) As of the date of this report, includes $107M in federal funded account balances transferred to the TSA that relate to disaster relief. (d) Inflows related to the Department of Health, Department of Labor and Human Resources, the Commissioner of Financial Institutions, and others. (e) Payroll is paid bi‐weekly on the 15th and 30th (or last day of the month, whichever comes sooner).  (f) Related to employee withholdings, social security, insurance, and other deductions.  (g) Police payroll is reflected individually because it is paid through a separate bank account. Also, the police payroll line item shown in the TSA cash flow is gross (i.e. inclusive of Other Payroll Related items). (h) Includes payments to third‐party vendors as well as intergovernmental payments to agencies with separate Treasuries.  (i) This refers to General Fund appropriations to non‐TSA entities such as Legislative Assembly, Correctional Health, Comprehensive Cancer Center, and others. (j) Excludes Banco Popular of Puerto Rico Account with balance of approximately $146mm;  Amounts deposited in GDB subject to GDB restructuring. (k) Unless otherwise stated, variances are either not material in nature or are expected to reverse in the short term. (l) Section 2.6(b)(ii) of the Superpriority Post‐petition Revolving Credit Loan Agreement (The Agreement) specifies that upon PREPA's receipt of any revenues in excess of amounts necessary to (i) pay budgeted expenses for  Ineligible Uses provided for in the Budget (inclusive of the Ineligible Uses Variance) and other allowable expenses for Ineligible Uses, or any FEMA reimbursable expense for contracts that have been obligated by FEMA and  approved by the Oversight Board and (ii) maintain a maximum cash balance of up to $300M PREPA shall apply such Revenues to the repayment of the outstanding Revolving Credit Loans.  The criteria that result in any  aforementioned repayment may be triggered due to the seasonality of PREPA operations.  Depending on the timing of PREPA receipts and disbursements, additional repayments may occur over the next several weeks,  though additional draw downs may also occur before fiscal year‐end.

YTD variance mainly due to ‐$30M lower in Department of Health collections and ‐$32M lower in Treasury collections,  with the remaining variance spread across 40+ other agencies.  The majority of YTD variance (‐$62M of total) is due to  collections shortfall in September and October following Hurricane Maria, and may be permanent. YTD variance is mostly permanent, due to ‐$316M in COFINA SUT collections flowing to the COFINA bank account that  were not considered in the Liquidity Plan, lost revenues from Hurricane Maria's impact on economic activity, temporary  sales tax exemptions on prepared foods and items sold by small and medium merchants (exemptions expired on 1/7  and 12/31, respectively), and various other competing drivers such as a shift in buying mix from smaller, less SUT  compliant stores to larger, more SUT compliant retailers.

5

$649,252 $697,718

Comments (k) Though collections were below Liquidity Plan by 7%, collections received into the Collections Post Account on 6/14 and  6/15 resulted in $194M in collections that will be deposited into the TSA next week (see Schedule A, line 17). Significant  YTD collections variances are  ‐$100M in Act 154 collections, ‐$64M in Nonresident Withholdings, ‐$28M in Individual  Income tax collections, partially offset by +$284M in Corporate Income Taxes, +$195M in Petroleum & Gas taxes.

Variance is due to the timing of federal funds received for the Medicaid Program and the subsequent pass‐through  appropriation to ASES, and will be offset later this month. YTD Variance largely due to additional transfers in funds to support capital expenditures and congestion management  initiatives for HTA, consistent with the Revised Fiscal Plan. Variance is mostly permanent due to additional funds reapportioned from the Reconciliation Adjustment ($38M) for  ASEM in order to support ongoing liquidity needs at this Component Unit. Refer to Schedule H for details of the  reapportionment by agency that provided the funding for these distributions to the Police Department. Vendor disbursements exceeded Liquidity Plan by 21% for the week ended 6/15 due to higher disbursements for the  Department of Education and other agencies. The largest portion ($467M as of 5/31) of YTD variance is related to  federally‐reimbursable disbursements, approximately 65% of which the Liquidity Plan projected would relate to budget  period 2017. Weekly and YTD variances are most likely permanent and are offset by increases in federal funds received for the  Nutritional Assistance Program due to additional funding provided for by The Additional Supplemental Appropriations  for Disaster Relief Requirements Act of 2017.

36

YTD variance offsets GDB Transactions (relates to legacy debt service deposit agreement) variance in inflows (line 14),  with remaining variance due to timing. $151M of the YTD Variance is offset by the Net Loan outstanding to PREPA ($300M loan to PREPA less $149M in loan  repayments due to PREPA's excess revenue collections ‐ see note 38 below). The $300M original loan repurposed  portions of the Reconciliation Adjustment that is budgeted at the agency level (see Schedule H of this report for  additional detail).  Remaining YTD variance has been deferred to later this fiscal year. 15, 38 YTD variance due to excess revenues collected by PREPA that were applied to the repayment of outstanding Revolving  Credit Loans, in accordance with Section 2.6(b)(ii) of the Superpriority Post‐petition Revolving Credit Loan Agreement(l).   Depending on the timing of PREPA receipts and disbursements, additional repayments (in excess of the total $149M  already repaid) or draw downs may occur throughout the remainder of the year. 37

8

Puerto Rico Department of Treasury | AAFAF Schedule A: Collections Detail ‐ Actual Results vs. Forecast (a)

(figures in $000s)

As of June 15, 2018

Actual

Forecast

Variance

Actual

Forecast

Variance

6/15

6/15

6/15

YTD

YTD

YTD

$58,086

$25,708

$32,378

$2,173,673

$2,201,598

($27,924)

$224,845

151,297

73,548

1,759,434

1,475,451

283,983

$54,293

19,426

34,868

607,569

672,062

(64,494)

$136,562

109,319

27,243

1,303,289

1,403,677

(100,388)

$7,875

4,953

2,922

251,046

259,105

(8,059)

General Fund 1

Individuals

2

Corporations

3

Non Residents Withholdings

4

Act 154

5

Alcoholic Beverages

6

Cigarettes

7

Motor Vehicles

8

Other General Fund

9

Total General Fund Portion of General Collections

$232 $9,274

(3,186)

3,418

212,370

210,486

1,884

2,736

6,537

394,548

297,678

96,870

$3,735

37,647

$494,901

$347,900

171,667

407,479

(235,813)

$147,002

(33,913)

$6,873,596

$6,927,538

($53,942)

1,175

75,254

74,089

1,165

Retained Revenues (b) 10 AACA Pass Through 11 AFI/RBC Pass Through

$1,011

7,491

25,455

(17,964)

12 ASC Pass Through

$1,079

6,675

(5,597)

76,814

95,694

(18,879)

13 HTA Pass Through

$24,967

(2,088)

27,055

634,320

439,400

194,919

$1,127

(246)

1,373

71,439

127,915

(56,476)

14 Total Other Retained Revenues 15 Total Retained Revenues Portion of General Collections

$1

(164) (37)

38

$28,185

$4,141

$24,044

$865,318

$762,553

$102,765

16 Total Collections from DTPR Collections System

$523,086

$352,040

$171,046

$7,738,914

$7,690,091

$48,823

17 Timing‐related unreconciled TSA Collections (c)

($194,050)

18 Total General Collections

$329,036



($194,050)

$352,040

($23,004)

($86,579) $7,652,335



($86,579)

$7,690,091

($37,756)

Source: DTPR, collection system Footnotes: (a) Figures in forecast period correspond to original TSA liquidity plan projections, which was developed in July 2017 based on the Approved Budget, General Fund Revenue projections, and  other input from the DTPR and AAFAF teams. (b) Retained Revenues are revenues conditionally assigned to certain public corporations and the collections of those revenues are through accounts referred to as “pass through” accounts,  the majority of which include (i) ACAA auto insurance, (ii) AFI/RBC petroleum tax, (iii) ASC personal injury insurance, and (iv) HTA toll revenues. (c) Due to timing. Receipts in collections post account (CPA) occur approximately two business days prior to being deposited into the TSA.

9

Puerto Rico Department of Treasury | AAFAF Schedule B: Agency Collections Detail

(figures in $000s)

As of June 15, 2018

Actual

YTD

6/15

FY18

Agency 1

Department of Health

$1,083

$109,498

2

Funds under the Custody of the Department of Treasury 

923

56,809

3

Office of the Commissioner of Insurance 

358

51,170

4

Office of the Financial Institution Commissioner 

146

49,951

5

Department of Labor and Human Resources 

74

35,874

6

Department of Justice

329

18,359

7

Department of State

213

15,095

8

Department of Treasury 

28

12,793

9

Department of Natural and Environmental Resources 

275

7,845

10 Mental Health and Drug Addiction Services Administration 

131

7,528

11 Medical Emergencies Service 

32

7,229

12 Department of Education 

30

6,343

13 General Services Administration 

213

6,296

14 Department of Correction and Rehabilitation

134

6,203

11

5,473



5,180

15 Department of Recreation and Sport 16 Puerto Rico Police Department  17 Department of Housing 

23

4,589

18 Administration for the Horse Racing Sport and Industry

32

4,412

19 Deposits non‐identified (a) 20 Others (b) 21 Total

2

3,680

586

32,045

$4,621

$446,371

Source: DTPR Footnotes: (a) Includes transfers to other agencies in addition to unreconciled agency collections (b) Inflows related to Department of Transportation and Public Works, Firefighters Corps,  Environmental Quality Board, Department of Agriculture, and others. 

10

Puerto Rico Department of Treasury | AAFAF Schedule C: Federal Funds Receipts Detail 

(figures in $000s)

As of June 15, 2018

Actual

YTD

6/15

FY18

Agency 1

Adm. Socioeconomic. Dev. Family

$73,886

$2,212,757

2

Health

10,881

2,058,708

3

Department of Education 

25,355

741,303

4

Vocational Rehabilitation Adm.

289

32,928

5

Mental Health and Drug Addiction Services Adm.

6

Puerto Rico National Guard

7

Department of Labor and Human Resources 

8

Families and Children Adm.

9

Department of Justice

1,176

23,235



17,603

243

15,549

1,861

15,150

4,058

14,140

10 Department of Natural and Environmental Resources 

920

10,123

11 Environmental Quality Board

224

8,070



5,900

12 Department of Family  13 Others (a) 14 Fema ‐ Disaster Spend Reimbursement (b) 15 Total

12,682

122,478



106,661

$131,575

$5,384,604

Source: DTPR Footnotes: (a) Inflows related to the Women's Affairs Commission, the Municipal Affairs  Commission, Office of Elderly Affairs, and others.   (b) Represents reimbursement transfers to the TSA for various agencies' disaster related  spend.

11

Puerto Rico Department of Treasury | AAFAF Schedule D: Net (a) Payroll Detail

(figures in $000s)

As of June 15, 2018

Actual

YTD

6/15

FY18

General Fund 1

Education (d)

2

Correction and Rehab

3

Health

4

All Other Agencies (b)

5

Total General Fund

$26,568

$613,932

5,061

131,620

2,039

51,541

18,387

418,187

$52,055

$1,215,280

$44

293





Special Revenue Funds 6

Education (d)

7

Correction and Rehab

8

Health

9

All Other Agencies (b)

10 Total Special Revenue Funds

706

14,157

2,760

65,713

$3,511

$80,164

$8,256

$185,991

Federal Funds 11 Education (d) 12 Correction and Rehab 13 Health 14 All Other Agencies (b)

3

188

2,159

43,230

2,804

67,187

15 Total Federal Funds

$13,222

$296,595

16 Total Net Payroll from Payroll System

$68,788

$1,592,039

17 Timing‐related unreconciled Net Payroll (c)

($2,225)

18 Total Net Payroll

$66,563

$30,464 $1,622,503

Source: DTPR, RHUM system Footnotes: (a) Net payroll data provided by DTPR allows for a reliable break down analysis.  Note that net payroll is equal  to gross payroll less tax withholdings and other deductions. (b) Includes Firefighter Corps, National Guard, Public Housing Administration, Natural Resources  (c) Due to timing and reconciliation between RHUM payroll system and cash activity data.

12

Puerto Rico Department of Treasury | AAFAF Schedule E: Vendor Disbursements Detail

(figures in $000s)

As of June 15, 2018

Actual

YTD

6/15

FY18

General Fund 1

Education

2

General Court of Justice

3

Health

4

Other Agencies

5

Total General Fund

6

Education

7

General Court of Justice

8

Health

9

Other Agencies

$4,669

$354,576



107,228



105,469

10,938

654,851

$15,607

$1,222,124

442

51,392



15,703

Special Revenue Funds

10 Total Special Revenue Funds

0

155,474

5,098

394,950

$5,541

$617,519

4,321

231,792

Federal Funds 11 Education 12 General Court of Justice 13 Health 14 Other Agencies



303

1,938

184,528

30,833

363,896

15 Total Federal Funds

$37,093

$780,518

16 Total Vendor Disbursements from System

$58,240

$2,620,162

17 Timing‐related unreconciled Vendor Disbursements (b)

$20,506

$87,587

18 Total Vendor Disbursements

$78,746

$2,707,749

Source: DTPR's Bank checks paid report and PRIFAS system Footnotes: (a) Includes ASSMCA, Firefighters Corps, Emergency Medical Corps, Natural Resources Administration, and  (b) Unreconciled vendor disbursements is timing variance pending reconciliation between bank systems and  DTPR systems. 

13

Puerto Rico Department of Treasury | AAFAF Schedule F: Other Legislative Appropriations Detail

(figures in $000s)

As of June 15, 2018

Actual

YTD

6/15

FY18

Agency  1

Correctional Health



$57,699

2

House of Representatives



45,949

3

Puerto Rico Senate



40,932

4

Office of the Comptroller



37,359

5

Comprehensive Cancer Center



23,000 20,000

6

Legislative Donations Committee



7

Superintendent of the Capitol



15,148

8

Institute of Forensic Sciences 



14,614

9

Authority of Public‐Private Alliances (projects)



14,263

10 Martín Peña Canal Enlace Project Corporation 11 Legislative Services



10,941



10,475

12 Housing Financing Authority 13 All Others (a)



9,337



69,448

14



$369,165

Total Other Legislative Appropriations Source: DTPR

Footnotes: (a) Includes the Solid Waste Authority, Public Broadcasting Corporation, Musical Arts  Corporation, and several other agencies.

14

Puerto Rico Department of Treasury | AAFAF Central Government ‐ Partial Inventory of Known Short Term Obligations (a)

As of June 15, 2018

(figures in $000s) Obligation Type 3rd Party Vendor Invoices

Recorded Invoices (b) $                                              29,907

Obligation Type

Additional Invoices (c)

3rd Party Vendor Invoices

$                                            205,021

Obligation Type 3rd Party Vendor Invoices

Pre‐recorded Invoices (d) $                                              18,545

Intergovernmental Invoices

$                                              38,557

Intergovernmental Invoices

                                              105,504

Intergovernmental Invoices

$                                                5,750

Total

$                                              68,464

Total

$                                            310,525

Total

$                                              24,295

Source: DTPR

Source: BDO

Source: Compiled by BDO, data provided by agencies.

Footnotes: (a) The numbers presented represent a bottom‐up build of invoices at  the government agency level, which should not be considered to be  indicative of total Accounts Payable for the central government.  This  is due to issues surrounding invoice entry that has hindered the timely  cadence of recording invoices, which was made worse by the impact  of the Hurricanes. (b) Recorded invoice data was unavailable for the weeks ended 4/27  to 6/15, and as such the data presented above refers to  invoices/vouchers approved for payment by the agencies but checks  not released as of 4/20.

Footnotes: (c) The data presented above represents additional invoices identified  outside of DTPR main system for the following agencies as of 5/4:      ‐Police Department      ‐Department of Education      ‐Department of Justice      ‐Department of Correction and Rehabilitation      ‐Department of Transportation and Public Works      ‐Mental Health and Drug Addiction Services Administration      ‐Socio Economic Development Administration      ‐Administration for Children and Families      ‐Child Support Administration      ‐Environmental Quality Board      ‐Department of Health      ‐Department of Housing      ‐Department of Labor      ‐Department of Sports and Recreation      ‐Department of Natural Resources      ‐Administration for the Care and Development of Children      ‐Puerto Rico Fire Department      ‐Department of Family      ‐Department of Treasury

Footnotes: (d) Pre‐recorded AP is related to other agencies out of scope of BDO  that independently enters invoice data into a Live AP module prior to  invoices being approved for payment.

15

Puerto Rico Department of Treasury | AAFAF Central Government ‐ Partial Inventory of Known Short Term Obligations by agency (a)

As of June 15, 2018

(figures in $000s) Consolidated Inventory Invoices Description Department of Education Department of Health Mental Health and Drug Addiction Services Administration Environmental Quality Board Department of Correction and Rehabilitation Department of Labor Administration For Children and Families Other Agencies Total

                                                As of June 30, 2017                                   Checks in Vault (b)  Recorded AP (c) Additional AP (d) Total $                           3,535 $                    66,640 $                  165,459 $   235,633                                  ‐                         15,432                     132,856       148,288                                  ‐                                  2                           1,940           1,942                                  ‐                              716                           6,229           6,945                                  ‐                           7,582                         40,215         47,796                                  ‐                              903                         19,619         20,521                                  ‐                              143                         15,123         15,266                              1,170                         77,368                         43,059       121,597 $                           4,705 $                  168,786 $                  424,500 $   597,990

                                   As of September 8, 2017                        Recorded AP (c) Additional AP (d) Total $                    28,009 $                  161,824 $   189,833                           8,996                     130,760       139,756                              353                           6,086           6,439                              793                           7,194           7,987                              271                         36,746         37,018                               ‐                         23,556         23,556                           2,818                         22,254         25,073                         23,808                         63,883         87,691 $                    65,048 $                  452,304 $   517,352

                                       As of June 15, 2018                                  Recorded AP (c) Additional AP (d) Pre‐recorded AP (e) Total $                    22,889 $                    54,792 $                            ‐ $      77,680                         14,427                     120,010                               ‐       134,437                           3,800                           6,934                               ‐         10,734                              177                           4,346                               ‐           4,523                                37                         20,350                               ‐         20,387                              220                         26,442                               ‐         26,662                                25                           5,380                               ‐           5,405                         26,889                         72,272                         24,295       123,456 $                    68,464 $                  310,525 $                    24,295 $   403,284

3rd Party Vendor Payables Description Department of Education Department of Health Mental Health and Drug Addiction Services Administration Environmental Quality Board Department of Correction and Rehabilitation Department of Labor Administration For Children and Families Other Agencies Total

                                                As of June 30, 2017                                   Checks in Vault (b) Recorded AP (c) Additional AP (d) Total $                        39,845 $                      132,341 $   172,187 $                               ‐                           14,395                           92,876       107,271                                  ‐                                      2                             1,581           1,584                                  ‐                                395                             4,452           4,846                                  ‐                             3,603                           13,196         16,799                                  ‐                                211                           10,875         11,086                                  ‐                                143                           13,844         13,988                                  ‐                           29,046                           22,116         51,161                                  ‐ $                    87,639 $                  291,282 $   378,921 $                               ‐

                                   As of September 8, 2017                        Recorded AP (c) Additional AP (d) Total $                    14,166 $                    91,806 $   105,972                           8,320                         93,580       101,900                              353                           5,605           5,958                              353                           5,114           5,467                              256                           7,448           7,704                               ‐                         11,023         11,023                                41                         20,025         20,065                         16,005                         41,724         57,728 $                    39,494 $                  276,324 $   315,818

                                       As of June 15, 2018                                  Recorded AP (c) Additional AP (d) Pre‐recorded AP (e) Total $                       8,818 $                    46,948 $                            ‐ $      55,766                         11,325                         61,458                               ‐         72,783                           2,231                           5,976                               ‐           8,208                                18                           2,173                               ‐           2,192                                37                         17,311                               ‐         17,348                              220                         12,193                               ‐         12,413                                25                           2,107                               ‐           2,132                           7,233                         56,855                         18,545         82,633 $                    29,907 $                  205,021 $                    18,545 $   253,474

Intergovernmental Payables Description Department of Education Department of Health Mental Health and Drug Addiction Services Administration Environmental Quality Board Department of Correction and Rehabilitation Department of Labor Administration For Children and Families Other Agencies Total

                                                As of June 30, 2017                                   Checks in Vault (b)  Recorded AP (c) Additional AP (d) Total $                           3,535 $                    26,795 $                    33,117 $      63,447                                  ‐                           1,037                         39,980         41,017                                  ‐                               ‐                              359              359                                  ‐                              321                           1,777           2,098                                  ‐                           3,979                         27,018         30,997                                  ‐                              692                           8,744           9,435                                  ‐                               ‐                           1,279           1,279                              1,170                         48,323                         20,944         70,436 $                           4,705 $                    81,146 $                  133,218 $   219,069

                                   As of September 8, 2017                        Recorded AP (c) Additional AP (d) Total $                    13,842 $                    70,019 $      83,861                              676                         37,181         37,856                               ‐                              481              481                              440                           2,080           2,520                                15                         29,298         29,313                               ‐                         12,533         12,533                           2,778                           2,230           5,007                           7,803                         22,159         29,962 $                    25,554 $                  175,979 $   201,534

                                       As of June 15, 2018                                  Recorded AP (c) Additional AP (d) Pre‐recorded AP (e) Total $                    14,071 $                       7,843 $                            ‐ $      21,914         61,654                           3,102                         58,552                               ‐                           1,568                              958                               ‐           2,527                              159                           2,172                               ‐           2,331                               ‐                           3,039                               ‐           3,039                               ‐                         14,249                               ‐         14,249                               ‐                           3,273                               ‐           3,273                         19,657                         15,417                           5,750         40,823 $                    38,557 $                  105,504 $                       5,750 $   149,810

Footnotes: (a) The numbers presented represent a bottom‐up build of invoices at the government agency level, which should not be considered to be indicative of total Accounts Payable for the central government.   This is due to issues surrounding invoice entry that has hindered the timely cadence of recording invoices, which was made worse by the impact of the Hurricanes. (b) Refers to checks issued but kept in vault.  Due to control processes implemented this fiscal year, it is uncommon for there to be a material checks in vault balance, as now the Department of Treasury  has greater control over the approval and authorization of checks before they are issued. Data is sourced from Puerto Rico Department of Treasury. (c) Refers to invoices/vouchers approved for payment by the agencies but checks not released. Data is sourced from Puerto Rico Department of Treasury. Recorded invoice data was unavailable for the  weeks ended 4/27 to 6/15, and as such the data Recorded invoice data is updated as of 4/20. (d) Represents additional invoices identified outside of DTPR main system for the 19 agencies below.  Data is sourced from BDO.       ‐Police Department       ‐Department of Education       ‐Department of Health       ‐Department of Justice       ‐Department of Housing       ‐Department of Correction and Rehabilitation       ‐Department of Labor       ‐Department of Transportation and Public Works       ‐Department of Sports and Recreation       ‐Mental Health and Drug Addiction Services Administration       ‐Department of Natural Resources       ‐Socio Economic Development Administration       ‐Administration for the Care and Development of Children       ‐Administration for Children and Families       ‐Puerto Rico Fire Department       ‐Child Support Administration       ‐Department of Family       ‐Environmental Quality Board       ‐Department of Treasury (e) Pre‐recorded AP is related to other agencies out of scope for BDO that independently enter invoices into a Live AP module prior to invoice payment approval. The data is sourced from the agencies  themselves, compiled by BDO, and validated to ensure there is no overlap with other AP categories.

16

Puerto Rico Department of Treasury | AAFAF Central Government ‐ Partial Inventory of Known Short Term Obligations (a)

As of June 15, 2018

All Agencies (figures in $000s)                            Recorded AP (b)                                                    Additional AP (c)                                                Pre‐Recorded AP (d)                       Description Department of Health Department of Education  Department of Labor and Human Resources Department of Transportation and Public Works Department of Correction and Rehabilitation Department of Justice Highway and Transportation Authority Mental Health and Addiction Services Administration Hacienda (entidad interna ‐ fines de contabilidad) Department of Natural and Environmental Resources Puerto Rico Police  Administration for Socioeconomic Development of the Family Families and Children Administration General Services Administration Department of the Family Department of Housing Child Support Administration Commonwealth Election Commission Environmental Quality Board Institute of Puerto Rican Culture Department of the Treasury Department of Sports and Recreation  Office of Management and Budget Puerto Rico National Guard Vocational Rehabilitation Administration General Court of Justice Industrial Commission Veterans Advocate Office Office of the Governor State Historic Preservation Office Department of State Emergency Management and Disaster Administration Agency Firefighters Corps Elderly and Retired People Advocate Office  Telecommunication's Regulatory Board Planning Board Administration for Integral Development of Childhood Emergency Medical Services Corps State Energy Office of Public Policy  Office of the Electoral Comptroller Office of the Commissioner of Insurance Permit Management Office Joint Special Counsel on Legislative Donations Department of Agriculture  Office of the Financial Institutions Commissioner Women's Advocate Office Citizen's Advocate Office (Ombudsman) Civil Rights Commission Public Services Commission Department of Public Security Horse Racing Industry and Sport Administration Industrial Tax Exemption Office Cooperative  Development Commission Correctional Health Office of Public Security Affairs Health Advocate Office Parole Board University Pediatric Hospital Advocacy for Persons with Disabilities of the Commonwealth Energy Affairs Administration Office of the Commissioner of Municipal Affairs Office of Administration and Transformation of HR in the Govt. Department of Consumer Affairs Investigation, Prosecution and Appeals Commission Corrections Administration Joint Commission Reports Comptroller Other Total

3rd Party Payables

Intergovernmental  Payables

3rd Party Payables

Intergovernmental  Payables

$11,325                            8,818                                220                                290                                  37                            3,612                                 ‐                            2,231                                    0                                 ‐                                204                                 ‐                                  25                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                  18                                 ‐                            2,065                                 ‐                                 ‐                                147                                177                                685                                 ‐                                 ‐                                    0                                 ‐                                 ‐                                 ‐                                    4                                 ‐                                 ‐                                 ‐                                    0                                  21                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                  11                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                    1                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                  14                                 ‐                                 ‐                                 ‐                                    0                                 ‐                                    1                                 ‐                                 ‐                                 ‐

$3,102                          14,071                                 ‐                                 ‐                                 ‐                                  46                          10,000                            1,568                            5,956                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                491                                159                            2,904                                  18                                 ‐                                 ‐                                  17                                  10                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                200                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                  15                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐

$61,458                          46,948                          12,193                          18,335                          17,311                            7,984                                 ‐                            5,976                                 ‐                            5,777                            8,360                            4,013                            2,107                                 ‐                            3,637                            4,991                            1,681                                 ‐                            2,173                                 ‐                                  45                            1,733                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                100                                 ‐                                 ‐                                 ‐                                199                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐

$58,552                            7,843                          14,249                            2,838                            3,039                                779                                 ‐                                958                                 ‐                            3,768                                327                            2,464                            3,273                                 ‐                            1,543                                106                            3,322                                 ‐                            2,172                                 ‐                                  14                                252                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                    3                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐                                 ‐

$29,907 

$38,557 

$205,021 

$105,504 

3rd Party Payables

Intergovernmental  Payables

$0  $0                                    ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                               1,663                                    ‐                                      ‐                               3,950                                420                                    ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                               4,979                                420                                    ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                               1,884                             2,619                                    ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                                      ‐                               1,411                                    ‐                                  712                                389                             1,037                                   13                                    ‐                                      ‐                                  528                                   58                                555                                    ‐                                  475                                   11                                444                                    ‐                                  361                                   11                                289                                   67                                    ‐                                      ‐                                  206                                   25                                222                                    ‐                                  216                                    ‐                                      ‐                                      ‐                                  158                                   16                                177                                    ‐                                  124                                   33                                109                                     0                                103                                     0                                   78                                    ‐                                     72                                    ‐                                     49                                    ‐                                     50                                    ‐                                     49                                    ‐                                     46                                    ‐                                     45                                    ‐                                     41                                    ‐                                     35                                    ‐                                     31                                    ‐                                     23                                     5                                   24                                    ‐                                       8                                    ‐                                     17                                    ‐                                     16                                    ‐                                      ‐                                      ‐                                       5                                    ‐                                       5                                    ‐                                       2                                    ‐                                       2                                    ‐                                       2                                    ‐                                       0                                    ‐                                       1                                    ‐                                       1                                    ‐                                       1                                    ‐    $18,545 

$5,750 

Total $134,437                          77,680                          26,662                          21,462                          20,387                          12,420                          11,663                          10,734                          10,325                            9,545                            8,892                            6,478                            5,405                            5,399                            5,179                            5,098                            5,003                            4,994                            4,523                            2,904                            2,143                            1,985                            1,411                            1,266                            1,237                                685                                586                                555                                487                                444                                372                                356                                304                                232                                222                                216                                202                                195                                177                                157                                109                                104                                  78                                  72                                  60                                  50                                  49                                  46                                  45                                  41                                  37                                  31                                  27                                  24                                  23                                  17                                  16                                  14                                    5                                    5                                    2                                    2                                    2                                    1                                    1                                    1                                    1 $403,284 

Footnotes: (a) The numbers presented represent a bottom‐up build of invoices at the government agency level, which should not be considered to be indicative of total Accounts Payable for the central government.  This is due to issues  surrounding invoice entry that has hindered the timely cadence of recording invoices, which was made worse by the impact of the Hurricanes. (b) Refers to invoices/vouchers approved for payment by the agencies but checks not released. Data is sourced from Puerto Rico Department of Treasury. Recorded invoice data was unavailable for the weeks ended 4/27 to 6/15 and  as such the data Recorded invoice data is updated as of 4/20. (c) Represents additional invoices identified outside of DTPR main system. Data is sourced from BDO, who compiles this information for the 19 agencies included in its scope of work. (d) Pre‐recorded AP is related to other agencies out of scope for BDO that independently enter invoices into a Live AP module prior to invoice payment approval.  The data is sourced from the agencies themselves, compiled by  BDO, and validated to ensure there is no overlap with other AP categories.

17

Puerto Rico Department of Treasury | AAFAF Schedule H: Budget Allocation of the Reconciliation Adjustment

(figures in $000s)

As of June 15, 2018

Original Budgeted  Amount

Allocation to PREPA  Loan (a)

Allocation to DTOP  (b)

Allocation for GMS  (c)

Allocation for  Municipalities (d)

Allocation to the Police  Allocation to ASEM  Department (e) (f)

Total  (a to f)

Remaining

Agency $146,000

$80,367

$21,431

$3,077

$20,895



$10,126

$135,897

$10,103

2 Department of Treasury

90,000

49,541

13,211

1,897

12,881



6,242

83,772

6,228

3 Department of Education

75,000

41,284

11,009

1,581

10,734



5,202

69,810

5,190

4 OMB Funds

47,000









39,900



39,900

7,100

5 Adm Child Care & Development

40,000

22,018

5,872

843

5,725



2,774

37,232

2,768

6 Authority of Public Private Alliances

36,000

19,817

5,284

759

5,152



2,497

33,509

2,491

7 Corp Service Medical Center

30,000

16,514

4,404

632

4,294



2,081

27,924

2,076

8 Mental Health and Drug Addiction Services Administration 

30,000

16,514

4,404

632

4,294



2,081

27,924

2,076

9 PR Police Department

25,000

13,761

3,670

527

3,578



1,734

23,270

1,730

10 Transportation & Public Works

25,000

13,761

3,670

527

3,578



1,734

23,270

1,730

11 Administration for the Development of Agricultural Enterprises

25,000

13,761

3,670

527

3,578



1,734

23,270

1,730

12 Department of Corrections

1 Department of Health

15,000

8,257

2,202

316

2,147



1,040

13,962

1,038

13 Department of Justice

4,000

2,202

587

84

572



277

3,723

277

14 Firefighters

3,000

1,651

440

63

429



208

2,792

208

15 Highway Transportation Authority

1,000

550

147

21

143



69

931

69

$300,000

$80,000

$11,486

$44,814





$80,000

$11,486

16 Total

$592,000

17 Net Cash Utilized 18 Remaining Cash Available

($150,936) $44,814

$149,064

$78,000

$39,900

$37,800

$547,186

($78,000)

($18,961)

($37,800)

($285,697)



$20,939



$261,490

$306,303

Source: Office of Management and Budget Footnotes: (a) Following a Federal Court Ruling on February 19, 2018 that approved a loan request in the amount of $300M to PREPA from the TSA  (funds transferred to PREPA on 2/23), $300M was repurposed from the Reconciliation Adjustment budgeted at the agency level, and use of approved  budgeted amounts for the Reconciliation Adjustment from among 14 agencies provided the funding for this loan to PREPA. Refer to the above schedule for the detailed budget allocation by agency. Subsequently, due to excess revenues collected by PREPA that were applied to the  repayment of outstanding Revolving Credit Loans, separate payments totaling $149M YTD were made to the TSA from PREPA (see Net Inflow PREPA on page 7 of this report). However, the total $300M reapportioned amount is considered permanent variance to the FY2018 Liquidity  Plan, as additional funds repaid to the TSA may subsequently be re‐drawn by PREPA if necessary. (b) The Transportation and Public Works Department (DTOP) requested and was granted authorization to transfer $80M from the Reconciliation Adjustment (General Fund accounts 111, 141), to its capital improvement program (concept 081), to execute an intensive initiative  commencing May 26th, 2018.  Though the project will commence in FY2018, there are not expected to be any actual cash outlays until the next fiscal year. (c) The Office of Management and Budget (OMB) requested and was granted authorization to reapportion $11M from the Reconciliation Adjustment for the purpose of acquiring Microsoft Grant Management Solutions (GMS).  The implementation of GMS will permit the OMB, and up to  five other government agencies, to monitor, access, and manage allocation programs of federal funds. (d) Law 96‐2018, approved on May 8, 2018, provided for the creation of the Emergency Municipal Assistance Fund, through which $1M in funding is assigned to each of the 78 Puerto Rico Municipalities to cover operational and administrative costs in light of any declines in collections  resulting from Hurricanes Irma and Maria.  $78M was thus repurposed from agencies' budgeted Reconciliation Adjustment to provide for the creation of the aforementioned Emergency Municipal Assistance Fund. (e)  The Puerto Rico Police Department requested and was granted authorization to transfer $40M from the Recpnciliation Adjustment (General Fund Account 141, a single amount under the custody of OMB) to  cover June Payroll, Law 70 payments and overtime payments prior to the  (f) OMB granted authorization for the transfer and allocation of $38M from the Reconciliation Adjustment to ASEM in order to augment their current appropriations from Central Government and support ongoing liquidity needs at this Component Unit of the Commonwealth.

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